The European Commission is urging EU governments to limit fiscal measures such as energy subsidies, tax cuts and price caps in response to the energy price surge caused by the Iran war, warning that excessive spending could lead to a fiscal crisis. The commission wants measures to be temporary and targeted, as the EU's debt-to-GDP ratio has risen significantly since 2019 due to previous crises, including the pandemic and the Ukraine war.

The International Monetary Fund has warned that the move to blockchain-based trading infrastructure through tokenization could accelerate financial crises beyond regulators' capacity to respond. Although the technology promises cost reduction and elimination of settlement delays, the IMF sees instant settlement as a potential vulnerability, leaving little time for regulatory intervention. The IMF has suggested that the policy response should include clarifying tokenized assets' legal status and anchoring settlement in safe money.

US inflation data this week will reflect the initial impact of US President Donald Trump's war in Iran, with February's core personal consumption expenditures index expected to increase 0.4%. March's consumer price index is anticipated to show a 0.9% surge, driven by higher oil prices.

The Reserve Bank of India is expected to maintain interest rates amid market volatility triggered by war in Iran, which has led to a record low for the rupee and a rise in bond yields. Economists forecast lower growth and higher inflation if oil prices remain high, with most analysts predicting that the RBI will inject liquidity and support the rupee rather than raise rates.

The oil crisis triggered by the war in Iran is already affecting Asia, with factories reducing production and gas stations limiting fuel sales. Economists warn that Europe and Africa, both reliant on Middle Eastern imports, will soon face similar challenges. Iran's blockade of the Strait of Hormuz has cut global oil supply by 10%, and the US is less likely to experience shortages due to its status as a net energy exporter, but higher gas prices are affecting consumers.

OPEC+ has approved a symbolic increase in oil output quotas for May 2026, raising targets by about 206,000 barrels per day. However, this move is largely theoretical as the ongoing war in the Middle East has forced top producers to curtail supplies and heavily disrupted exports. With key Gulf producers still throttling output and the Strait of Hormuz remaining closed, the group's stated increase signals its intent to restore production once stability returns, but has little immediate effect on actual supply.

Investors are expecting central banks to raise interest rates in 2026 following a spike in inflation caused by the war in Iran. However rate hikes would not address the underlying supply issues and could unnecessarily exacerbate economic weakness. The US Federal Reserve is now expected to hold rates steady rather than cut, but the author suggests that, given the economic hit from expensive oil, central banks should avoid tightening policy and instead focus on supporting economic resilience.

This comprehensive 2-day Masterclass was developed to help participants understand the terminology of collateral, securities, and related documentation, learn about relevant regulatory history and current market practice, especially with regard to the post-Uncleared Margin Requirements landscape. This course also includes practical explanations of tasks and responsibilities for OTC margin managers. Register here to secure your spot!

Get ready for the most anticipated event in the derivatives calendar! Global market leaders, innovators and policymakers will meet at the ISDA AGM to exchange ideas and help shape the future of the industry. Join us for 3 days of engaging discussions, insights and unmatched networking opportunities with the people driving progress across financial markets. Register before December 31st to take advantage of early promo pricing. Click here to register.